Correlation Between Chartwell Short and Thornburg Low

Can any of the company-specific risk be diversified away by investing in both Chartwell Short and Thornburg Low at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Chartwell Short and Thornburg Low into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chartwell Short Duration and Thornburg Low Duration, you can compare the effects of market volatilities on Chartwell Short and Thornburg Low and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Chartwell Short with a short position of Thornburg Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chartwell Short and Thornburg Low.

Diversification Opportunities for Chartwell Short and Thornburg Low

0.9

Correlation Coefficient

Chartwell Short  Thornburg Low

Almost no diversification

The 3 months correlation between Chartwell and Thornburg is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Chartwell Short Duration and Thornburg Low Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Low Duration and Chartwell Short is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Chartwell Short Duration are associated (or correlated) with Thornburg Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Low Duration has no effect on the direction of Chartwell Short i.e., Chartwell Short and Thornburg Low go up and down completely randomly.

Pair Corralation between Chartwell Short and Thornburg Low

Assuming the 90 days horizon Chartwell Short Duration is expected to generate 0.95 times more return on investment than Thornburg Low. However, Chartwell Short Duration is 1.06 times less risky than Thornburg Low. It trades about 0.29 of its potential returns per unit of risk. Thornburg Low Duration is currently generating about 0.2 per unit of risk. If you would invest  938.00  in Chartwell Short Duration on December 23, 2024 and sell it today you would earn a total of  16.00  from holding Chartwell Short Duration or generate 1.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Chartwell Short Duration  vs.  Thornburg Low Duration

Chartwell Short Duration

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chartwell Short Duration are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Chartwell Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Thornburg Low Duration

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thornburg Low Duration are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Thornburg Low is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chartwell Short and Thornburg Low

The main advantage of trading using opposite Chartwell Short and Thornburg Low positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chartwell Short position performs unexpectedly, Thornburg Low can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Thornburg Low will offset losses from the drop in Thornburg Low's long position.

The idea behind Chartwell Short Duration and Thornburg Low Duration pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.